tv Bloomberg Markets European Close Bloomberg March 8, 2017 11:00am-12:01pm EST
mark: we are going to take you from new york to london in the next hour. we are covering a story out of washington and paris. here are the top stories today from around the world. philip hammond delivers the government's budget. with.k. growth forecast . vonnie: u.s. treasuries are sliding for an eighth consecutive day. will the federal a trigger on a rate hike next week? we look at how far they could tumble. bracing for the french elections. a ceo calls 2017 the year of transition. mark: we will have a look at where european equities are
trading 30 minutes until the end of the wednesday session. stocks rebounding from earlier losses when they were down for the six and second day, worst stretch since november. the sterling was lower ahead of the budget from chancellor philip hammond. still down for the third day. look at the yields creeping up across europe. let's talk about adidas. shares of to a new high today. 8.9% higher.biggest gain since november 2008. raising is sales and earnings forecast through 2020. 2017 forecast ahead of analyst estimates. business should rise between 20% to 22% through 2020. raised their outlooks four times in the last year providing a springboard for the
new chief executive who did the rain from herbert. plans to over invest in the u.s. to catch up with nike. we were talking earlier about gold futures falling for a seventh consecutive day. -- etf fund investors holding on to their goal. money has been moving out to the etf as physical gold. it is the largest u.k. list. the prospect of higher borrowing costs curbing the appeal of non-interest. today.ata in china a chinese deficit. imports surging from a year earlier. the nation posting a rare deficit in february.
31.8%, almost double the projected estimate from economists. a $9.2 billion trade deficit. the first negative reading in three years. analysts putting it down to the week long lunar new year holiday going back to early 2013. 90 minutes into the trading day. how is it looking, julie? some: here we have economic data that was much better news in terms of job growth. jobs grew much higher than expected last month, at least by its measure of private sector employment. 298,000 perhaps a foreshadowing or looking ahead to friday jobs. but we are not seeing that with reaction in u.s. stocks today. dow is lower. the s&p 500 and nasdaq are steady, higher. a change in yield and u.s. dollar. it is climbing today about one
third of 1%. conversely, we have declines in commodities. the same adp report sending down gold prices on what is essentially confirmation in the minds of some investors that the fed will raise rates on march 15. we have crude oil prices lower than they were before we got the inventory data that on one hand showed a build in crude, but on the other hand showed a drawdown and other refined products. i want to build off of something mark was talking about with adidas. adidas changing its two, une, expanding more in fashion. foot locker is higher. dick's is higher. on the flipside, urban offitters and express, both which are trading lower after disappointing earnings from
those two retailers. urban outfitters in particular, the ceo making some really pessimistic comments about the state of the u.s. retail industry. mark: let's get the latest on the budget and chancellor philip hammond. cehic is standing by with the very latest. an of be projection for this year. not so a beat for the following years. nejra: that is exactly it. i would call it perhaps cautiously optimistic or upbeat but with you giveaways. that growth forecast for 2017 raise to 2% in november, but in every consecutive year after that to 2021, the forecast was unchanged or downgraded because it is the prospect of brexit looming. something philip hammond had to acknowledge. he was not given much room for
maneuver because in terms of the debt, he wants to keep to that target to balance the budget by the ninth parliamentary term beginning in 2020. to be reduceding by 23.5 billion pounds over the next five years. in terms of taxes, there were some concessions in terms of business rates, but there was a tax rise for the self-employed which has come under some criticism. a drop in the tax dividends. at the beginning of his speech, he summed it up like this. the deficit has come down. there were cuts to the deficit forecast. debt is still high. yes, employment is rising, productivity is still low. mark: we will see you in about 20 minutes. thank you. let's get more insight on brexit. the big ecb decision tomorrow. lou is here, senior investment
manager at aberdeen management. great to see you. you are a bonds guy. it is exciting, isn't it? why aren't we getting more excited about the 10 year today? >> trying to be excited about the budget. that's remember the amount of debt in the u.k. is well over one trillion. 23 billion less over this period in time. inflation, interest rates, that is what will be driving the 10 year higher. mark: the growth forecast has been boosted. obr under forecasted. i think the u.k. economy can be ok. mark: it is possible. luke: it is possible. we do not get into the meat of brexit until next year.
it could bring close to that this year, but next year, we will struggle. vonnie: what about other parts of europe? thinking france for example, the netherlands, where elections are coming up. luke: the elections will be the key point to play here. we have the builders probably winning in the netherlands. all of us are expecting in the market. concern about it day-to-day. we are seeing for a full markets going a little bit wider on germany. if we get through those, we could have a period of decent performance from europe. the problem i see is we can see these outcomes becoming more extreme if we do not get through them. penn into the
second round, we could see momentum building into the german election in the autumn and the next italian election in june. that is where the problems become tight for europe. vonnie: waiting to make some wise thbets? position of the sure position in the u.s. versus long position in the u.s. building up cash and waiting for volatility. volatility is low across a lot of markets. it will spike. that is when we will start to see opportunities come back again. mark: talk about inflation. you are of the view that inflation will be at the forefront of our thinking for years to come. what does that mean when it comes to investing in the next couple of years? periode have had a long
of wally nields. -- falling yields. we could be the next three to five years of general falling yields. you change your psyche. you remember the asymmetric risks and bonds. you protect your capital. that means you run with a lower duration profile than you have ever the last 30 years. less risk overall in your portfolio. mark: you have been reducing the risk. give us an example how you have been doing that. luke: we have been selling things we are concerned about, m&a risk. you were talking earlier on about m&a could be back in the pharma sector again. we see it coming again and again and again. well,ink this is a great solid business. suddenly, it is not.
everybody wakes up to where they could go in the future. that is a big risk for investors. as the growth continues in europe and accelerates in the u.s., companies get more aggressive, get more m&a coming through. for us, that has been the area of most reductions, in the telecom space, pharmaceutical space. just concentrating on spaces that have been through their problems. the oil industry i still quite like, even with the oil prices have a look long way, these companies have reset their cost basis so much. it is interesting. mark: luke will be staying with us for the next 10 minutes or so. we will focus on u.s. markets and the next fed decision, which is next week. vonnie: just a few days away. in the meantime, two house committees are holding meetings on the reveal and replacement of the affordable care act. the house energy and commerce
we have gone from klingon to on to2.57 -- clinging 2.50 to 2.57. luke: a quite narrow range. 10 basis points. it really reflects a little bit of uncertainty about when and how much we get the fiscal push from trump. the market's in a bit of a pause now. i have been saying three rate hikes for a while and i am quite happy. mark: four? you being tempted or not? luke: maybe three and a quarter .ul because we could go from mark: what are key beyond the 10 year? for you, does anything signal the end of this bull market? is there a figure or not? luke: fair value with projected
growth is probably three and a quarter, maybe three and a half as a top number. if we get to 2.60 and it feels convincing, three could happen quickly if we see political eruptions happening around the world. maybe that supports a little bit as a safe haven. trump is bringing in his physical side. the payrolls this week will be so important. we could see that gap between 2.60 and 3.00 go quick. vonnie: you did not say you were short u.s. debt, did you? luke: we are mostly short, the u.k. if you want to take a view of u.s. debt waiting for the 2.60 to be broken convincingly, that is when you think about being short on the u.s. 10 year. that is largely the same trade. if you could be short, and
probably gives you similar point of returns as well. we like u.s. investment. we think it is one of the few credit markets around the world where there is debt and liquidity. liquidity in europe and the u.k. could be something we will be talking about quite a lot over the next couple of years as the central banks pull back their buying process. breadth makend the it quite attractive for us. talking about central banks pulling back, is the ecb before september going to talk about pulling back? tapering has not happened yet. luke: it has not and i don't think we will get that tomorrow, but maybe -- mark: september. luke: if you look at the projection of buying german
debt by the ecb, they will hit that 35 limit next summer. tapering could be starting. it is when the market starts projecting and how quick it cspens and see stp stops -- pp stops. we think cspp will be ending next year. cbps in the u.k. in six months. mark: what then? luke: that is always me a little bit and why we have been pulling back risk. when you have had such a big buyer for the last asked to nine months andix to nine the number of players reducing because there are plenty of new players in the u.k. market.
we think the u.k. experience and coming out of that central-bank support will be something as a playbook people will be using when europe does the same next year. mark: is it me again? i have another one. even better. let's look as far as japan. another fascinating case. at what juncture do they stop importing the 0% level? how far away can you get from 0% without officially saying we are moving away from it? luke: we have almost got there, heavenly? -- haven't we? mark: yes. luke: japan will be continuing with the program for the rest of this year. in some ways, it is working. you will see inflation come through. labor markets are improving slowly over there.
they have a lot of structural problems to get through and a massive savings glut, which has been feeding its way throughout the whole world. that japanese story becomes one that very much, what happens to u.s. yields -- much what happens to u.s. yields. that will be the interesting thing. i don't think we will see much reaction from japan for some while. i am pretty sure we see a pretty japa in japannd through through the summer. vonnie: great stuff. usll ahead, what a ceo told the eurozone as the country gets ready for his presidential election. tomorrow, francine lacqua will have an exclusive interview with jamie dimon at 7:45 a.m. eastern. this is bloomberg. ♪
mark: this is "bloomberg markets ." the french has people remain supportive of the eurozone at of the french election. frederick sent out exclusively today with jon ferro. >> we should keep in mind that we are 50 days from the elections. long-term in politics. second for people watching is in the u.s. come i would like to highlight that in this election, we have two grounds. -- rounds. the second is a more rational vote with people who have kept a strong political culture in front. in the debate, we see more andification of the program third what i would like to highlight is you also have the parliamentary reelection, which is important. not just the presidential one. the question of which majority is important. the situation is more complex
than it is sometimes described. as a rational vote or not to vote for marine le pen? >> some of the people at the election will represent more protests and a bit less rational. let's keep in mind that people in france remained supportive of europe and the construction of the eurozone. this will come into the debate with more on what will be the consequences of such a scenario. second, the political culture is strong. when we have tv shows, people watch the tv shows. you have millions of people watching. the turnout in the vote is also important. that is the differences with some other countries. jon: let's talk about something you can have direct control of. have you have any contact with marine le pen or members of her
team? >> banks and companies in general do not want to interfere in the local debate. we don't do that. what we do is again stick to our strategic agenda. my strategy is reinforcement of the european construction. eurozone construction in particular as we share the same currency. in particular in light of brexit, which appears to be more fragmented, there is support for that in france. we see there are opportunities as banks. for manys intriguing people that many large financial firms including those in the u.s. have met with members of marine le pen's team. offace the prospect nomination risk in the eurozone. 's letter to sit down with her
to see the direction of her policies? -- people in the u.s. want to have more knowledge and spend less time than we do listening to the people. we have relatively good thing. it'll be clarified in the coming days and weeks because the campaign to a certain extent has not started. it will start when we have the list of the final list of candidates in march. it will then be clarified. between the program and what is happening, there is sometimes a difference. mark: frederick in an exclusive interview. the close is next. this is bloomberg. ♪ ways wins.
the best performing industry group gaining over 1% today. ,e were lower for a fifth day longest stretch since november. it is all about u.k. but today. will grow 2% this year according to philip hammond. a gain of 1.4%. the difference it will be 51.7 billion pounds for this fiscal year. budgetoffice for responsibility projects borrowing 23.5 billion over the next five years. this is sterling against the dollar. this is a 12 month chart starting lower today. was lower earlier. falling for the third day. 8th day.for the we have the political aspects.
theresa may suffering that defeat in the house of laws yesterday. rewriting her draft law to guarantee parliament a meaningful vote at the end of the brexit process. this is the 10 year yield today. britain will sell 115.1 billion pounds of guilt this fiscal year starting in april. that is the lowest issuance since the height of the andncial crisis in 2007 2008 it is slightly more than the 109.7 billion estimate. with thernment bonds best performers in february across the globe. 1.22% percent today.let's finish with -- 1.22% today. let's finish with this chart. the number of analysts raising their profit estimates for firms worldwide has exceeded those lowering for three straight weeks according to citigroup. the gauge is four-week moving
average turning positive for the first time since 2011. jeffrey says this proves the equities are entering "a sweet spot." lindsey moore reaction to the chancellor's budget today. let's cross over to the green to nejra cehic, who is standing by at westminster. nejra: it is a lot quieter now hour.t was the last the protesters have gone, but we are still digesting the budget from chancellor philip hammond. upgrade to the forecast for 2017, the not so much from 2018 an onward. i am joined now by carolyn. great to have you on the program. happy national women's day. >> thank you. and to you as well. nejra: people have criticized the various aspects of this budget, but there is one element that you see as quite positive. >> we really welcome what we see
as a breakthrough in technical skills. we are going into this new area of the year in post-brexit of a lot of technology change. we have skills shortages throughout the country. the fact that the chancellor has allocated 500 million pounds to a technical skills shakeup is really welcomed. nejra: the chancellor did talk about productivity. he said even though unemployment is high, productivity is still low. measures announced today go far enough for you? carolyn: they are modest. productivity remains the biggest challenge for this country. it is productivity at the macro level but also across different parts of the country. we need investments in infrastructure, intermission, innovation, and skills. we will be looking forward to the budget for something more
substantial, particularly around infrastructure. nejra: where there any parts of that that fell short for you in the budget? carolyn: we would like to see more support in the short-term for business, particularly around business rates. we would have liked to have seen more. we look forward to the autumn budget. we think there may need to be significantly more support at that point. nejra: on that point of triggering article 50, we have heard from theresa may often this week that she is on track to get article 50 by the end of this month, which was her self-imposed headline. block another stumbling with an amendment being added. does anything matter for businesses if we end up leaving the single market? carolyn: there is a very big price to go for, and that is a new economic partnership
with the european union. that is where we need to look to next. it is a new deal. when articleabout 50 is triggered is getting negotiations to a good start. some early wins signal to business that that is where we are heading. nejra: also, we have to talk about sterling. still the worst-performing major currency this year. it is weaker today. when i hear concerns going forward with the uncertainty surrounding brexit if we see further weakness in sterling? carolyn: is a very mixed picture for business. some of our members benefit from it. we are seeing export pickup, which is incredibly welcome. there are other companies that are facing higher import bills. that will start making a difference to consumer spending. it is a mixed picture. we are hoping that most of the decrease in sterling have been
priced in and we will not super the volatility on the day of the article 50 trigger. nejra: on the growth forecast, upbeat for 2017. not so much for 2018 and beyond. how would you advise your members to prepare for downturn in growth that might come with brexit? carolyn: we think they need to be preparing, and we are working intensively to start thinking about what this world might look like under different scenarios. they are already doing that. our businesses have shown to be very resilient. we should be proud of them over the last nine months. they have carried on doing what they do best, which is investing and growing. they will need to start preparing. they are starting to prepare. the we'll be watching very closely to see what happens in the first three months of negotiations. nejra: thank you so much, carolyn. we will all of course be watching closely on developments from here. mark: great job. great, great job.
vonnie: thanks. time to check in on the bloomberg first word news. courtney donohoe. courtney: james comey said today's cybersecurity ca i can be compared to the fight against terrorism. the press are too fast, too big him into widespread for any of us to address them alone. >> these are more than just attacks on our infrastructure. they are attacks on employees and customers, attacks on reputation, attacks on our economy and security, and they are increasingly attacks on our fundamental rights. james comey also said he plans to serve his entire term as fbi director, telling the crowd "you are stuck with me another six and a half years." president is meeting with the widow of steve jobs. he will discuss immigration and
education. jobs's fortune is valued at almost $18 million. she has created a foundation that supports immigration and environmental reform. in asia, the islamic state has claimed was once ability for an attack at a main hospital in afghanistan. more than 30 people were killed. more than 50 wounded. it was a suicide bombing, and the attackers wore medical uniforms. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: courtney, thank you. let's take a look at u.s. treasuries. we have seen a big move today post adp. abigail: one of the big stories is we are now seeing the longest slump for treasuries since 2012. here it is. we now have the treasury yield rising eight days in a row, the
longest since march of 2012. this puts the move in perspective. it is 25 basis points, which matches the last longest since november last year right after the election. the 10 year yield is caught in this range. .3 onon the top or 2 the bottom. it is in a sideways trend. despite recent of the around an interest rate spike next week, there is some uncertainty here. the 10 year yield has been slicing through it. sometimes that suggests you will see an alternative move. we could see a dip. .own be prepared -- dip down be prepared. this is the 10 year yield since 1981. the great bond bull market. the point to be made here is this downtrend in yield of the bull market remains intact.
all attempts to break it over the last more than 35 years has failed. will this one be the one? we really don't know. this chart suggests that history suggests the bull market could still be in place, but we will be watching. taking a look at high-yield, finally. a high-yield etf. this represents price. we see that high-yield over the last year has been rallying. the risk on rally supported by high yields, but the uptrend is starting to reverse in this range. just recently, starting to get down. there could be some safety sought by investors soon in the form of treasuries. too soon to say. vonnie: thank you. happening right now on capitol hill, two house committees are holding meetings on the repeal and replacement of the affordable care act. the house energy committee and
mark: live from london and new york, i am mark barton. vonnie: i am vonnie quinn. this is the european close on "bloomberg markets." we now have the republican plan to replace obamacare and two of the biggest questions it raises, what will it do to health care, and what will it do to the budget? we have that the of everything about to happen before it was
scored. two committee meetings today to try to figure out the scoring of all this. >> yes, republicans divided on this issue. to party conservatives -- tea party conservatives all coming out against this proposal. is being marked up in the house. they don't to push it to the senate by march 28. upon that time, they would be relying on the senate. not have ao filibuster. president trump standing behind house speaker ryan. this is the first time he has to referee this division of tension within the republican party about whether or not they support this bill. vonnie: what amendments will might we expect to this bill? paul ryan must be expected to make some amendments. >> yesterday, vice president
mike pence meeting with members of congress to discuss and begin to lay out this. he told republicans this was the beginning of a negotiation phase and this will go through the open committee process. this plan was started several years ago. the previous congresses, even before president trump took office. this is nothing new. the price we are seeing where existing fights we have seen -- the fights we are seeing our existing fights we have seen. i can tell you in order for them to get the tax reform, they will have to get the health care. earlier this morning, i interviewed the chairman of the house transportation committee representative bill shuster to ask him about how realistic it was for them to carry out the administration wanting to have a $1 trillion infrastructure proposal. i asked him when exactly that timeline would put in? -- fit
in? >> the sooner the better, but we have obamacare first and then they have to figure out where the dollars will come from with tax reform. in the summer, early fall. hopefully we will get it done this year. >> the chairman saying this could come with infrastructure as well as the fall. think that isides a bullish assessment to say the least. mark: kevin, thanks a lot. bloomberg's chief washington correspondent. the country's newest commerce secretary joining bloomberg daybreak: americas today. he talked about trade, currencies, and the border. .> studying it very carefully as we can to understand more of the intricate details of it and how interacts with everything else, that is when we will take a position. >> you suggested quite correctly
that speaker ryan has for this forward as a way as a principal part to save a lot of money, but it does have trade ramifications. it will affect trade flows that you must be analyzing. >> absolutely. anything that affects what goes across the border has a trade implication, but it is meant to be part of an overall tax package. you have several issues. one, whether or not to do a border adjustable? second, what magnitude of it is needed? third, the intricate details, how does it really work? a domestic producer who does some exporting, that is one set of facts. if you are an importer of a different one, both more complicated. simple thing to analyze. because it is so important and with such large numbers, we are
talking about potentially $1 trillion over a 10 yearp eri pe. that is too big of a number to get long. >> chancellor merkel will be visiting washington next week. there has been some discussion from the administration about trade with germany, where there is a trade deficit. will that be on the agenda for discussions with angela merkel? >> my guess is those discussions will be somewhat higher level than getting precisely into how many automobiles from germany gasol here. i would be surprised if you got to that level of granularity in the discussion . it is also obligated that germany is not a separate entity. trade relations with the outside world fundamentally come through the eu so it is a little more public it is structurally than
with mexico or canada. >> this is the point that peter navarro has made recently. he criticizes germany, saying they are getting an advantage in trade because they are part of the euro. is that part of trade policy of the u.s. government? >> currency is a factor in trade, clearly. for example, with mexico, the weakness of the peso has been a significant factor in trade. peso is way down versus the dollar just this year let alone prior years. sure, that affect the competitiveness of countries. >> in a he was policy at this point that the euro is too weak against the dollar? >> the matters are mostly dealt by treasury, not commerce. my plate is pretty full with what is on it, so i am not going to go poaching through other people's plate. >> finally mr. secretary, does
it strike you as ironic if you tracked how candidate trump did in the polls, it had a direct relationship with the peso. a lot of the devaluation seems to be in response with president trump being elected. is it ironic that the more successful he is, it drives down the peso and exacerbates the trade problem? >> that is a complicated equation. i think what it does show is markets tend to adjust to realities and as the probability of the trump presidency grew, clearly it had implications for mexico and others. now that the trump presidency is a reality, it is even more clear -- it has even more clear implications. mark: on "bloomberg daybreak: americas" a little earlier. a look at japan's economy facing bonds in the u.s. and u.k..
vonnie: and is time now for our battle of the charts. access theses charts on the bloomberg by running the function featured at firstttom of your screen is taylor riggs -- screen. first is taylor riggs. taylor: i wanted to look ahead at the fed meeting and a look at the short-term yield curve and where u.s. and u.k. bonds are trading at that.i give the spread between the u.s. two-year and the u.k. two-year. usually, the sprint is negative as the u.s. yield is lower. there is nothing new about that. that is what should be expected. look at 2016.everything changes . we spoke to two people on
"bloomberg surveillance" this morning that were explaining this dynamic to us. in the u.s., we are raising rates faster sooner. the u.k. not happening at all there. said theome strategist economy is on a gradual down path slower. .ou can check out my chart here vonnie: just about the yields in the u.s. and the u.k. mark: can i just say, happy international women's day to you both? anything to boost my chances of winning. vonnie: i already said it to tailor. too late for that one.
you have to think of something else. mark: it was a week ago that i did a chart on japanese inflation. first increase since december 2015. i did not win. i will go back and talk about japan once again. look at his wonderful chart. the white line is the dollar-yen. such a volatile measure. japan's economy grew for a second consecutive quarter. 1.2% on an annualized basis. if it was one of the quarter, it would be the longest streak since mid-2006. let's look at the glass half-full. the week yen will boost competitiveness, corporate profits.
bring on the boj next week. i have a bone to pick with our first judge because i think that was an amazing chart. it should have won the first time. however, today, you are still not winning. i'm sorry. it is international women's day. taylor, you got the crowd today. it was an amazing chart. mark: well done, both of you. quick programming note. tomorrow, big day. big interview. francine lacqua got an exclusive interview with jamie dimon at 7:45 a.m. eastern, 12:45 london. this is bloomberg. ♪
vonnie: from bloomberg world headquarters in new york, we will take you from washington, d.c., to london and frankfurt. here are the top stories around the world. in market, u.s. stocks trading after a two day slide. hiringees in the u.s. the most since three years. treasuries are headed for the longest losing streak in five years. 8th straight an session. hour, ip later in the will be speaking to alisa w od. -- wood. the outlook for private equity and more this international women's day. we are halfway into the trading day today.